TaxCut error?

Bishoop · Joined: 01 Feb 2008 Posts: 14

I'm using a fully updated version of TaxCut.

When I completed entering all the data my total tax was $6815 (line 63) on a
taxable income of $59283 (line 43).

Subsequently I received a 1099-Int for $23. I entered the newly received
interest into TaxCut and my tax rose by $9. The taxable income on line 43
rose only by the $23 interest amount.

Shouldn't the increase in interest of $23 result in a 25% (about 6$) raise
in the total tax?

Am I wrong or does TaxCut have a problem?

Thanks....

Archived from group: misc>taxes

Bishoop · Joined: 01 Feb 2008 Posts: 14

"Bishoop" wrote in message @giganews.com...
> I'm using a fully updated version of TaxCut.
>
> When I completed entering all the data my total tax was $6815 (line 63) on
> a taxable income of $59283 (line 43).
>
> Subsequently I received a 1099-Int for $23. I entered the newly received
> interest into TaxCut and my tax rose by $9. The taxable income on line 43
> rose only by the $23 interest amount.
>
> Shouldn't the increase in interest of $23 result in a 25% (about 6$) raise
> in the total tax?
>
> Am I wrong or does TaxCut have a problem?
>
> Thanks....

The tax actually rose $10 in the above example.

Paul Thomas, CPA · Joined: 25 Aug 2007 Posts: 3094

"Bishoop" wrote
> I'm using a fully updated version of TaxCut.
>
> When I completed entering all the data my total tax was $6815 (line 63) on
> a taxable income of $59283 (line 43).
>
> Subsequently I received a 1099-Int for $23. I entered the newly received
> interest into TaxCut and my tax rose by $9. The taxable income on line 43
> rose only by the $23 interest amount.
>
> Shouldn't the increase in interest of $23 result in a 25% (about 6$) raise
> in the total tax?
>
> Am I wrong or does TaxCut have a problem?

There's no telling. An increase in income could decrease your itemized
deductions, decrease other credits, etc.

Look at all the line items between AGI and Line 63 to see what is different.

--
Paul A. Thomas, CPA
Athens, Georgia

Bishoop · Joined: 01 Feb 2008 Posts: 14

"Paul Thomas, CPA" wrote in message %jqj.70462$_m.65613@bignews4.bellsouth.net...
>
> "Bishoop" wrote
>> I'm using a fully updated version of TaxCut.
>>
>> When I completed entering all the data my total tax was $6815 (line 63)
>> on a taxable income of $59283 (line 43).
>>
>> Subsequently I received a 1099-Int for $23. I entered the newly received
>> interest into TaxCut and my tax rose by $9. The taxable income on line
>> 43 rose only by the $23 interest amount.
>>
>> Shouldn't the increase in interest of $23 result in a 25% (about 6$)
>> raise in the total tax?
>>
>> Am I wrong or does TaxCut have a problem?
>
>
>
>
>
>
>
> There's no telling. An increase in income could decrease your itemized
> deductions, decrease other credits, etc.
>
> Look at all the line items between AGI and Line 63 to see what is
> different.
>
>
>
>
> --
> Paul A. Thomas, CPA
> Athens, Georgia

I take the standard deduction.

I compared everything and the increase on in AGI and taxable income (line
43) is $23 as I would expect. Tax (line 44) shows a tax increase of $9.

When I get down to Amount Due (line 7 Cool

the difference is $10. The
difference between line 44 and 78 is probably due to rounding.

But, I've discovered a more potentially serious problem. I manually
calculated the tax on a taxable income (line 43) of $59,306.

Using the 2007 tax rate schedules for Single found at the link below. I
calculate a tax of $11,232 and the TaxCut software calculates only $6,838
(line 44).

http://www.irs.gov/formspubs/article/0,,id=164272,00.html

Are there different table for us old folks over 65?

Phil Marti · Joined: 25 Aug 2007 Posts: 2520

"Bishoop" wrote:

> But, I've discovered a more potentially serious problem. I manually
> calculated the tax on a taxable income (line 43) of $59,306.
>
> Using the 2007 tax rate schedules for Single found at the link below. I
> calculate a tax of $11,232 and the TaxCut software calculates only $6,838
> (line 44).

For starters, you can't use Tax Rate Schedules. Your calculations must be
based on the Tax Tables.

It seems that your tax is not being calculated solely based on the Tax
Tables. Suspects that immediately come to mind are positive entries on
lines 9b and 13 of the 1040. This would mean that your tax would be
computed on a worksheet rather than just taken from the Tax Tables.

Try right-clicking on line 44 and see it that will take you to a calculation
worksheet.

---------------
Phil Marti
Clarksburg, MD

mrdarrett · Joined: 25 Aug 2007 Posts: 29

On Feb 6, 6:45 am, "Bishoop" wrote:
> I'm using a fully updated version of TaxCut.
>
> When I completed entering all the data my total tax was $6815 (line 63) on a
> taxable income of $59283 (line 43).
>
> Subsequently I received a 1099-Int for $23. I entered the newly received
> interest into TaxCut and my tax rose by $9. The taxable income on line 43
> rose only by the $23 interest amount.
>
> Shouldn't the increase in interest of $23 result in a 25% (about 6$) raise
> in the total tax?
>
> Am I wrong or does TaxCut have a problem?
>
> Thanks....

When you do your taxes manually, what answer do you get?

Personally I do my taxes manually then use TaxCut to "check" my math.
Sometimes I'm pleasantly surprised (TaxCut finds deductions I wasn't
aware of)... and sometimes I'm not (TaxCut two years ago didn't give
me the choice of deducting state income taxes vs. sales taxes)

Michael

Bishoop · Joined: 01 Feb 2008 Posts: 14

"Phil Marti" wrote in message $K%.2867@trnddc04...
> "Bishoop" wrote:
>
>> But, I've discovered a more potentially serious problem. I manually
>> calculated the tax on a taxable income (line 43) of $59,306.
>>
>> Using the 2007 tax rate schedules for Single found at the link below. I
>> calculate a tax of $11,232 and the TaxCut software calculates only $6,838
>> (line 44).
>
> For starters, you can't use Tax Rate Schedules. Your calculations must be
> based on the Tax Tables.
>
> It seems that your tax is not being calculated solely based on the Tax
> Tables. Suspects that immediately come to mind are positive entries on
> lines 9b and 13 of the 1040. This would mean that your tax would be
> computed on a worksheet rather than just taken from the Tax Tables.
>
> Try right-clicking on line 44 and see it that will take you to a
> calculation worksheet.
>
> ---------------
> Phil Marti
> Clarksburg, MD

Thanks for the tip. That explains it for me. Right click and "Go to
related" and there on the Sch D worksheet was what I need to know.

Thanks so much for taking the time to help me, I do appreciate it.

mrdarrett · Joined: 25 Aug 2007 Posts: 29

On Feb 6, 8:46 am, "Bishoop" wrote:
> "Phil Marti" wrote in message
>
> $K%.2867@trnddc04...
>
>
>
> > "Bishoop" wrote:
>
> >> But, I've discovered a more potentially serious problem. I manually
> >> calculated the tax on a taxable income (line 43) of $59,306.
>
> >> Using the 2007 tax rate schedules for Single found at the link below. I
> >> calculate a tax of $11,232 and the TaxCut software calculates only $6,838
> >> (line 44).
>
> > For starters, you can't use Tax Rate Schedules. Your calculations must be
> > based on the Tax Tables.
>
> > It seems that your tax is not being calculated solely based on the Tax
> > Tables. Suspects that immediately come to mind are positive entries on
> > lines 9b and 13 of the 1040. This would mean that your tax would be
> > computed on a worksheet rather than just taken from the Tax Tables.
>
> > Try right-clicking on line 44 and see it that will take you to a
> > calculation worksheet.
>
> > ---------------
> > Phil Marti
> > Clarksburg, MD
>
> Thanks for the tip. That explains it for me. Right click and "Go to
> related" and there on the Sch D worksheet was what I need to know.
>
> Thanks so much for taking the time to help me, I do appreciate it.

Schedule D, eh? Did you know that you can sock away up to $5,000 a
year for 2008 ($10,000 if you're married) into a Roth IRA, and not
have to fill out another Schedule D?

Michael

Bishoop · Joined: 01 Feb 2008 Posts: 14

wrote in message @i12g2000prf.googlegroups.com...
> On Feb 6, 8:46 am, "Bishoop" wrote:
>> "Phil Marti" wrote in message
>>
>> $K%.2867@trnddc04...
>>
>>
>>
>> > "Bishoop" wrote:
>>
>> >> But, I've discovered a more potentially serious problem. I manually
>> >> calculated the tax on a taxable income (line 43) of $59,306.
>>
>> >> Using the 2007 tax rate schedules for Single found at the link below.
>> >> I
>> >> calculate a tax of $11,232 and the TaxCut software calculates only
>> >> $6,838
>> >> (line 44).
>>
>> > For starters, you can't use Tax Rate Schedules. Your calculations must
>> > be
>> > based on the Tax Tables.
>>
>> > It seems that your tax is not being calculated solely based on the Tax
>> > Tables. Suspects that immediately come to mind are positive entries on
>> > lines 9b and 13 of the 1040. This would mean that your tax would be
>> > computed on a worksheet rather than just taken from the Tax Tables.
>>
>> > Try right-clicking on line 44 and see it that will take you to a
>> > calculation worksheet.
>>
>> > ---------------
>> > Phil Marti
>> > Clarksburg, MD
>>
>> Thanks for the tip. That explains it for me. Right click and "Go to
>> related" and there on the Sch D worksheet was what I need to know.
>>
>> Thanks so much for taking the time to help me, I do appreciate it.
>
>
> Schedule D, eh? Did you know that you can sock away up to $5,000 a
> year for 2008 ($10,000 if you're married) into a Roth IRA, and not
> have to fill out another Schedule D?
>
> Michael

Retired....

Phil Marti · Joined: 25 Aug 2007 Posts: 2520

wrote:

> Schedule D, eh? Did you know that you can sock away up to $5,000 a
> year for 2008 ($10,000 if you're married) into a Roth IRA, and not
> have to fill out another Schedule D?

Huh? Leaving aside for the moment the fact that you could not contribute
$10,000 to one Roth IRA (each spouse could contribute $5,000 to his/her
own), how would having a Roth IRA automatically mean that one wouldn't have
investments in a regular taxable account?

--
Phil Marti
Clarksburg, MD

D. Stussy · Joined: 25 Aug 2007 Posts: 126

"Bishoop" wrote in message@giganews.com...
> I'm using a fully updated version of TaxCut.
>
> When I completed entering all the data my total tax was $6815 (line 63) on
a
> taxable income of $59283 (line 43).
>
> Subsequently I received a 1099-Int for $23. I entered the newly received
> interest into TaxCut and my tax rose by $9. The taxable income on line 43
> rose only by the $23 interest amount.
>
> Shouldn't the increase in interest of $23 result in a 25% (about 6$) raise
> in the total tax?
>
> Am I wrong or does TaxCut have a problem?

You're wrong.

It's called the "tax table." By adding the $23, you changed from one
$50-range to another. If you're in the 25% bracket, your tax should have
changed by $12 or $13 (depending on rounding in the table itself).

Bishoop · Joined: 01 Feb 2008 Posts: 14

"D. Stussy" wrote in message $pk9$1@snarked.org...
> "Bishoop" wrote in message
> @giganews.com...
>> I'm using a fully updated version of TaxCut.
>>
>> When I completed entering all the data my total tax was $6815 (line 63)
>> on
> a
>> taxable income of $59283 (line 43).
>>
>> Subsequently I received a 1099-Int for $23. I entered the newly received
>> interest into TaxCut and my tax rose by $9. The taxable income on line
>> 43
>> rose only by the $23 interest amount.
>>
>> Shouldn't the increase in interest of $23 result in a 25% (about 6$)
>> raise
>> in the total tax?
>>
>> Am I wrong or does TaxCut have a problem?
>
> You're wrong.
>
> It's called the "tax table." By adding the $23, you changed from one
> $50-range to another. If you're in the 25% bracket, your tax should have
> changed by $12 or $13 (depending on rounding in the table itself).

Got it. Too bad the tax software doesn't "compute" the tax instead of
referring to the tables.

Thanks....

Phil Marti · Joined: 25 Aug 2007 Posts: 2520

"Bishoop" wrote:

> Got it. Too bad the tax software doesn't "compute" the tax instead of
> referring to the tables.

They can't. It's in the law. Write your members of Congress.

--
Phil Marti
Clarksburg, MD

Bishoop · Joined: 01 Feb 2008 Posts: 14

"Phil Marti" wrote in message $Wr4.1462@trnddc05...
> "Bishoop" wrote:
>
>> Got it. Too bad the tax software doesn't "compute" the tax instead of
>> referring to the tables.
>
> They can't. It's in the law. Write your members of Congress.
>
> --
> Phil Marti
> Clarksburg, MD

Yep, that'll work. Smile

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